World economy to contract by 3%: IMF’s report
Part of: GS Prelims and GS-III – Economy
- As per the International Monetary Fund’s (IMF) World Economic Outlook (WEO), COVID-19 pandemic is having a ‘severe’ effect on the world economy.
- The economy is expected to contract by 3% in 2020, which will be much worse than the 2008-09 financial crises.
- As per the WEO, India’s growth is expected to dip to 1.9% in 2020 and rebound to 7.4% in 2021.
- Similar observation was made by the World bank’s South Asia Economic Focus report.
- As countries implement necessary quarantines and social-distancing practices to contain the pandemic, the world has been put in a great lockdown due to which all the economic activities have been affected.
- The cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis could be around $9 trillion, greater than the economies of Japan and Germany, combined.
Important value additions:
The World Economic Outlook (WEO)
- It is an IMF report that provides analysis and forecasts of economic developments and policies in its member countries.
- It also projects developments in the global financial markets and economic systems.
- The WEO is usually prepared twice a year.
International Monetary Fund
- It is an organization of 189 countries which has the objectives to:
- foster global monetary cooperation,
- secure financial stability,
- facilitate international trade,
- promote high employment and sustainable economic growth
- reduce poverty around the world.
- It was created in 1945.
- It is governed by and accountable to the 189 member countries.
- Its primary purpose is to ensure the stability of the international monetary system, that is, the system of exchange rates and international payments that enables countries to transact with each other.